Weekend Stock Market Outlook
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Stock Market Outlook For The Week of
February 23rd = Uptrend
ADX Directional Indicators: Downtrend
Price & Volume Action: Mixed
Objective Elliott Wave Analysis: Uptrend
The stock market outlook starts this week in an uptrend. The ADX directional indicators turned bearish on Friday, but price/volume remains mixed and OEW charts still show an uptrend.
2020-02-23 - SPX Trendline Analysis - Daily
The S&P notched another all time high last week, but also ran into institutional selling. On the positive side, even though the total number of distribution days is high, they're clustered in January. The selling we saw last week was relatively low, given then overall trading volume last week was well below average.
On the negative side, the S&P is still over-extended from its 200-day, compared to historical averages, so a sell-off wouldn't surprise.
Keep in mind that prices tend to take the stairs up, but take the elevator down! So watch out for high volume selling this week, especially if the 50-day moving average doesn't hold.
2020-02-23 - SPX Trendline Analysis - Weekly
Within China, there are some encouraging signs that the spread of the coronavirus has slowed. However, the virus hasn't been contained and is now spreading faster outside of China (e.g. South Korea, Italy, etc.).
To date, the indexes have held up relatively well. But there will be economic impacts even if things improve from here on out, so investors need to stay vigilant (especially those of you who are passive investors).
The S&P500 is a market cap index, so the companies with the largest market cap have the greatest influence. Right now, the 5 largest companies in the index are Microsoft, Apple, Amazon, Google and Facebook. They account for ~18% of the index.
And Apple just lowered revenue expectations because of the situation. They're the first company to make major headlines doing so, but far from the only company that will see their revenues take a hit. Watch for additional warnings as the quarter progresses; anything from those top 5 will have an oversize impact on the S&P.
It's concerning that there's so little discussion of the coronavirus in the U.S.. Instead, it has been politics 24/7. With earnings season coming to a close, and a lack of data to be released, I expect that will change this week...especially if we see any type of sell-off or correction (no matter how "needed" it may be).
Best to your week!
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Charts provided courtesy of stockcharts.com.
If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book on Amazon via the following affiliate link: How to Make Money in Stocks: A Winning System in Good Times and Bad. It's one of my favorites.
For the detailed Elliott Wave Analysis, go to the ELLIOTT WAVE lives on by Tony Caldaro.
Once a year, I review the market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.
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